Tariff-Driven Bicycle Markup Will Fall On U.S. Consumers

We're continuing our coverage of the ongoing trade conflict with China. For months now, we've been touching base with people in different industries to ask how their businesses have been affected. President Trump's increased tariffs on Chinese goods went into effect Friday, so we decided to reach out to somebody in the bicycle industry, which imports more than 90% of bikes and bike parts from China. We've called Morgan Lommele. She is the director of state and local policy at PeopleForBikes. That's a bike industry coalition. And she's with us now from Boulder, Colo.

Morgan Lommele, thanks so much for talking to us.

MORGAN LOMMELE: My pleasure.

MARTIN: Can I ask, first of all, why do more than 90% of bikes and bike parts come from China? Do we know?

LOMMELE: A number of economic factors in the last 20, 30 years have just shifted manufacturing to China. And you can imagine the first one would be cost. And it's just simply more cost-efficient to manufacture bicycles and bicycle components in China.

MARTIN: So, as we said, tariffs went up to 25% from 10% this week. President Trump has said that this tariff hike is going to put pressure on China. I'd like you to explain how this actually works from where you sit. I mean, who actually pays?

LOMMELE: The consumers. And considering the fact that the general tariff on a bicycle was 11% before this trade dispute started, now the tariff on bicycles is 36%. And that's really the tariff that they pay when the bike comes to port and comes into the U.S. And then there's always a markup on that once the bike reaches the floor of a bicycle shop or a mass market retailer. So the consumer will pay more than 36% on top of the existing true cost of manufacturing the bicycle. So, you know, about 6,500 small bicycle retailers exist in the U.S. And we can all imagine, you know, the bicycle shop on our - you know, downtown. And there are tens of thousands of mass market retailers where you buy different kinds of bicycles.

And so the bike industry in general thought that they could absorb the 10% increase that's been in effect for the last few months. And there's no way that they can absorb a 25% increase, so that will be borne by the consumer whether you're buying a $100 bike or a $10,000 bike across the board. There's no way that the industry can absorb that.

MARTIN: Can you give me a sense of what the price hike might be for a consumer buying, you know, the first or second bike for a kid, let's say?

LOMMELE: Yeah. And so this does apply to kid's bike, too. You know that in general, the tariff burden will increase by probably $250 million, and so retail prices will be raised. And so if you consider, gosh, a $100 bike, which is a fair price point for most Americans looking to buy their first bicycle or a kid's bicycle, $100 is a lot of money for a lot of people. Who knows what'll happen? But if I had to look in a crystal ball, that price will probably go up to 125, 150.

And there are a lot of road riders or mountain bikers or anyone who is more of an enthusiast - they're paying $2,000, $3,000, $4,000 for a bike, and that same percentage price increase will apply to them as well. The bike doesn't get any cheaper because of the tariffs or the kind of bike riding you like to do. So bike prices will probably go up, you know, $1,000 on a $4,000 bike.

MARTIN: How soon do you think that this impact will be felt?

LOMMELE: I think it'll be felt by the end of the summer. So anything that's manufactured and delivered after June 1 will cost more to import into the U.S. And so that price will be seen in these mom and pop shops that rely on sometimes a shrinking consumer base to sell their products to.

MARTIN: And if the price goes up to that degree, what effect is this going to have on these shops?

LOMMELE: Well, a bicycle isn't like a gallon of milk, you know? The demand can fluctuate. And so the demand for bicycles will probably go down. We're seeing bike shops close because in some areas, the demand for bicycling is going down. And this is a huge blow if you consider anyone having to sell bikes 25% to 50% increase in price.

MARTIN: That's Morgan Lommele. She's the director of state and local policy with PeopleForBikes. We reached her in Boulder, Colo.